Plaintiff: FILA Sports Co., Ltd. Defendants: Zhejiang Zhongyuan Shoes Co., Ltd.; Wenzhou Unique Electronic Commerce Co., Ltd.; and Mr. Liu. Case number: (2017) Jing 73 Min Zhong No. 1991. Appellate judgment: March 5, 2018.
The Beijing Intellectual Property Court upheld the first-instance judgment in a trademark infringement and unfair competition dispute brought by FILA Sports Co., Ltd. The defendants were ordered to stop infringing its trademark rights and pay RMB 8.32 million in economic losses and reasonable enforcement expenses. The court applied punitive damages at three times the relevant calculation basis, attracting considerable attention in trademark practice.
Background
The FILA brand was established in Italy in 1911. In 2008, FILA Sports Co., Ltd. held exclusive rights to use in China trademark No. 163332 (F and device), No. 163333 (FILA), No. 881462 (FILA in Chinese) and No. G691003A (FILA and device), and used these marks over a long period on clothing and footwear.
In June 2016, FILA Sports Co., Ltd. discovered that Zhongyuan Shoes and Mr. Liu, owner of the GFLA mark, were using a GFLA logo similar to the FILA marks on footwear. It sued Zhongyuan Shoes, Zhongyuan Electronic Commerce Co., Ltd. (the predecessor of Unique) and Mr. Liu in the Beijing Xicheng District People’s Court.
The first-instance court ordered the three defendants to stop the infringement and eliminate its effects, and held them jointly liable for RMB 7.91 million in economic losses and RMB 410,000 in reasonable expenses. The defendants appealed to the Beijing Intellectual Property Court.
Basis for the Award
The appellate court applied Article 63(1) of the Trademark Law then in force. Damages were determined according to the trademark owner’s actual loss; where that loss was difficult to calculate, the infringer’s profits could be used. If neither could be calculated, damages could be determined at a reasonable multiple of the trademark royalty. For malicious infringement in serious circumstances, damages could be set at one to three times the amount determined on that basis, together with reasonable expenses incurred to stop the infringement.
The appellate court upheld compensation of RMB 7.91 million for economic losses and RMB 410,000 for reasonable expenses, totaling RMB 8.32 million, approximately USD 1.21 million.
Malicious Infringement and Serious Circumstances
As operators selling similar goods, Zhongyuan Shoes and Unique should have known the reputation of FILA Sports Co., Ltd.’s registered trademarks. They prominently used a similar logo on footwear manufactured and sold through Tmall, Taobao, JD and their own website, generating substantial sales.
As early as July 19, 2010, the Trademark Office had rejected application No. 7682295 for the GFLA mark on clothing, hats and shoes because it was similar to trademark No. G691003A. Despite knowing of FILA Sports Co., Ltd.’s FILA marks through that refusal, the defendants continued producing and selling the infringing goods. The court found malicious infringement in serious circumstances and calculated damages at three times the infringers’ profits.
The Trademark Law amendment adopted on April 23, 2019, increased the upper limit for punitive damages for malicious trademark infringement from three times to five times the relevant calculation basis.
